Is Standard Chartered PLC A Super Income Stock?

Standard Chartered (LSE: STAN) (NASDAQOTH: SCBFF.US) is one of the few companies in the FTSE 100 that offers an excellent income as well as great growth prospects.

For instance, it currently yields 4.1%, which is 17% higher than the FTSE 100 yield of 3.5%. However, it’s not only a great income stock because of its yield, since Standard Chartered offers the potential for considerable dividend per share growth, too.

For example, its dividend per share isforecast to increase by 5.8% in 2014 and by 8.5% in 2015. So, not only does Standard Chartered offer an attractive yield at present, its dividend growth rate is equally impressive and, more importantly, is well ahead of inflation.

However, that’s not to say that Standard Chartered is being reckless when it comes to managing its finances. In other words, while it is being generous with dividends it is also ensuring there is enough capital being reinvested in the company as well. For example, the proportion of earnings paid out as dividends is forecast to remain fairly flat at 42% over the next couple of years.

This not only highlights that there should be sufficient capital reinvested in the business, but also that there is scope for a higher proportion of profits to be paid out as dividends, without compromising the financial health of the company.

Linked to this is a double-digit growth rate in earnings that is set to be achieved in 2014 and 2015, when earnings per share are forecast to rise by 10% per year. As mentioned, this shows that Standard Chartered is not only a great income play but also offers strong prospects, with the latter boosting the former via improved dividends per share.

Trading on a price to earnings (P/E) ratio of just 10.5, Standard Chartered appears to offer excellent value for money. Not only does it have a great yield, strong earnings growth prospects and excellent dividend per share growth prospects, it comes at a price that is below the market average.

With the FTSE 100 trading on a P/E of 13.5, Standard Chartered appears to offer value and growth, as well as being a super income stock.

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Peter does not own shares in Standard Chartered. The Motley Fool owns shares in Standard Chartered.